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Cryptocurrency

Binance Australia forced to suspend PayID deposits, withdrawals also hit, as crypto exchange debanked amid scams crackdown

- May 18, 2023 3 MIN READ
Crypto investors hoping to get their cash in a hurry through Binance Australia will be forced to wait a day or two longer after the crypto exchange said it has been forced to stop offering PayID deposits for Australian dollar account holders following “a decision made by our third party payment service provider”.

The bebanking of Binance comes as Westpac launched a crackdown on scams, with a specific focus on cryptocurrency exchanges. Westpac says it is not the third party provider involved.

The change also impacts Binance Australia’s Bank Transfer withdrawals, with the exchange saying it will advise users on timeline when this is confirmed. They change to PayID deposits is effective immediately.

“We are working hard to find an alternative provider to continue offering AUD deposits and withdrawals to our users,” Binance said in a tweet.

The exchange said customers can still buy and sell crypto using credit or debit card and the Binance P2P marketplace.

“Rest assured that your funds are safe through the Secure Asset Fund for Users (SAFU), an insurance fund that offers protection to Binance users and their funds in the event of extreme situations,” Binance said.

De‑banking is where a bank declines to offer or withdraws banking services to a customer. It has been a major issue for fintechs in Australia, especially for the crypto sector. In October last year, the Council of Financial Regulators released a paper  on potential policy responses to address the issue. The paper was commissioned in response to the final report of the Senate Select Committee on Australia as a Technology and Financial Centre.

The federal government has yet to release its response to the recommendations in the Financial Regulators paper.

More problems

The latest problems with transactions at Binance comes just 10 days after the world’s largest crypto exchange was forced to temporarily close bitcoin withdrawals “due to the large volume of pending transactions.”

On May 8, Binance explained that the pause was because “our set fees did not anticipate the recent surge in $BTC network gas fees”.

They replaced the pending bitcoin withdrawal transactions with a higher fee to ensure they would be picked up by mining pools.

“To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed,” Binance said.

“This is a learning opportunity for us and we’ll do our best to prevent this from happening again.”

Last month corporate regulator ASIC cancelled the Australian financial services licence (AFSL) held by Oztures Trading Pty Ltd, trading as Binance Australia Derivatives (Binance). The cancellation took effect from April 14, with Binance clients made to close any existing derivative positions before April 21

ASIC has been conducting a targeted review of Binance financial services business in Australia, including its classification of retail and wholesale clients. In late March, ASIC issued a notice of hearing to consider whether ASIC should cancel or suspend the AFS licence held by Oztures Trading Pty Ltd.

ASIC Chair Joe Longo said it was important AFS licensees classify retail and wholesale clients in accordance with the law.

“Retail clients trading in crypto derivatives are afforded important rights and consumer protections under financial services laws in Australia, including access to external dispute resolution through the Australian Financial Complaints Authority,” he said.

“Our targeted review of these matters is ongoing, including focus on the extent of consumer harms.”

Scam response

Meanwhile, big four bank Westpac revealed today that it has begun trialling new customer protections for some cryptocurrency payments to reduce scam losses.

Westpac’s customer services and technology boss, Scott Collary, said a phased trial of the new protection blocks will be rolled out over the coming weeks.

“Digital exchanges have a legitimate role to play in the financial ecosystem. But since the rise of digital currency, we’ve noticed that scammers are increasingly using overseas exchanges,” Collary said.

“Often our customers only discover they’ve been scammed after the money has left the country, making recovery extremely difficult. The trial of our new security measures will better protect customers from scams.”

The bank said its latest data shows that investment scams account for approximately half of all scam losses, with a third of all scam payments are transferred directly to a cryptocurrency exchange.

Earlier this week, Westpac was one of 17 banks signing up to a new anti-fraud platform that in early trials has already cut bank-to-bank scam payments in half, freezing the transfers amid early detection.

The Australian Banking Association’s Fraud Reporting Exchange (FRX) platform allows reporting of scam payments in close to real time, boosting the likelihood that funds can be frozen and returned to customers.

The new Fraud Reporting Exchange (FRX) platform will enable faster and more targeted communication to help banks stop and recover as much money as possible when customers have paid scammers.

The FRX is owned and operated by the Australian Financial Crimes Exchange (AFCX), an independent body built and funded by Australian banks.

ABA CEO Anna Bligh said FRX means banks are now better placed to jointly identify funds which have been fraudulently transferred.

“Given every minute can be crucial in disrupting scams, the launch of the FRX is a major development,” she said.

“It means more and more scammers are going to hit a brick wall and adds to the arsenal of anti-scam initiatives underway.

Australians lost more than $3 billion in scams last year.

 

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